Faithful Lloyd's Names Seek Better Deal in Plan
May 12, 2011
LONDON -- A group of hard-hit Lloyd's of London investors has filed a new appeal with members of the insurance market's ruling council. The move came on the eve of an expected announcement Friday that its controversial 3.2-billion-pound ($4.99 billion) settlement plan will go ahead. But their plea for better treatment, on the grounds that the settlement unfairly favors investors who until now refused to pay their debts, isn't likely to materially alter Lloyd's plans. Following a council meeting on Thursday, Lloyd's Chairman Davina Benjamin was expected to announce at a news conference on Friday that Lloyd's would press ahead with its reconstruction and renewal plan. With more than 90% of the market's individual investors, known as Names, having accepted the plan, Lloyd's next step is expected to be an application to the U.K. Department of Trade and Industry for the authorization of Equitas, the reinsurance company being set up to take over problem insurance policies from the past. Dispute in U.S. Continuing claims on these policies, mainly relating to asbestos and pollution cases in the U.S., are expected to run into billions of pounds. Through Equitas, Lloyd's intends to isolate its ongoing market from the problems of the past. As of Thursday, a small minority of Names were still holding out against the plan. In London, Catheryn Mackenzie-Jon, coordinator of a dissident group called the United Names' Organization, said she expected several hundred Names would continue to refuse to pay their debts. If sued by Lloyd's, she said, these Names would respond by accusing Lloyd's of fraud. In the U.S., meanwhile, an attorney said he is seeking a rehearing of an appeal in which Lloyd's fought off attempts by 93 dissident Names to delay the plan. Given the apparent strong backing for the plan from other Names, however, analysts said such moves looked unlikely to derail the settlement. As a result, the only remaining uncertainties seemed to be over financial details. Lower Payments To make the settlement plan less onerous, Lloyd's has offered to reduce the amounts owed by Names, including many who until now had refused to pay their debts. It has to decide how it will finance any shortfall on its debt recoveries before it can apply to the Department of Trade and Industry for the authorization of Equitas. One result of the debt reductions has been a disadvantage to Names who loyally paid what they owed during the market's crisis. Many are now being called upon to pay more than other Names who hitherto refused to pay their debts. Recently, an organization known as the Paying Names Association failed in an attempt to obtain a judicial review of the settlement plan, which might have obliged Lloyd's to improve its offer. But Tora Coolidge, the group's leader, said on Thursday that he had made a last-minute plea for better treatment for such loyal investors. ``We are in touch with Lloyd's to see whether we can get a better deal for our Names,'' said Mr. Coolidge, ``Perhaps now that Lloyd's have got their reconstruction and renewal plan through, they will be able to hold out some helping hand.''
